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Beating Your Debts Now

by Chris Green
October 14, 2009
Falling into the debt trap is dangerously easy. The relative ease of acquiring a credit card and in some cases of loans, facilitate the downfall of many individuals into the seemingly bottomless pit of indebtedness. Being in debt can put a serious strain on finances. Your capacity to save for important things like retirement, emergency funds and education are severely limited Beating your debts now is the way to go. If you want to move along on the financial road to freedom, you have to eliminate debt from your life.

If you remove debt from your budget, you can apply the money you used to pay for your credit card and loans to other purposes. The money can go to your savings, your retirement or college funds or a vacation.

How do you get yourself into the debt free zone?

You have to acknowledge that debt is seriously affecting your life. Without this admission, your motivation to become debt free will not be complete. Do you really want to live free of debt and its encumbrances?

Create a budget. You should track all of your income and each one of your expenses. Tracking your expenses will take some time to get used to. Small and seemingly inconsequential expenses are often overlooked. DonÂ't forget to track even the small expenses. Given time and frequency, your daily cup of coffee can come out quite expensive.

Strip your expenses to the most basic of your needs. Identify the expenses for your needs. Next, think about your wants. Remove all the wants from your budget. You will be able to pay off your debts quicker if you stick to the essentials for now.

Stop using your credit cards. Pay for everything in cash. You avoid incurring additional interest on more recent purchases this way. You are also forced to live within your means. Put away your credit cards or leave them at home. Paying for all your purchases in cash also allows you to track your expenses better as they seem more Â"realÂ" compared to purchases with a credit card.

Pay off the debt that has the highest interest rate first. If you have more than one card, pay the most to the credit card with the highest interest rate. Or, transfer the balance of your other cards to a low interest bearing credit card. Cancel your other credit cards so you wonÂ't be tempted. Before transferring any balance, make sure to read the fine print of the offer. You donÂ't want to see any surprises when the bill comes.

Talk to your creditors. Explain your situation and why repayment is difficult for you right now. Most creditors will be understanding of your situation and will offer a repayment scheme that will meet both partiesÂ' needs. This is especially true if you have been a good customer in the past. A previously clean record will aid greatly in this instance.

Consider debt consolidation. If you have multiple debts, debt consolidation may be the right step for you. You will no longer have to pay multiple interest rates on multiple debts. Instead, you pay for a single debt. This makes payments easier as you no longer have to track multiple due dates. Talk to your banker or a finance professional regarding your consolidation options for the best advice.

Taking the steps to beating your debts now will be very challenging. You will need patience and discipline. You didnÂ't acquire your debts overnight. You will not be able to repay them overnight. With proper discipline and determination, you will be able to repay your debts. DonÂ't lose hope and keep your eye on the not so distant prize.

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Beating Your Debts Now



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